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"Shares of UAE banks, already poised to outperform the broader market this year as profits improve on lower provisioning for bad loans, will get an extra boost from the inclusion next month of the country in the MSCI Emerging Markets Index.

Many banks in the country had benefited last year from a growth spurt in the economy that encouraged corporations and individuals to take out loans to expand their businesses and buy homes and cars. And as cash flows improved, more businesses and consumers were able to pay existing debt, lowering the amount that banks had to put aside for write offs. As a result, a great number of banks, including First Gulf Bank and Noor Bank, reported record profits. These earnings are likely to continue to improve this year."

"Foreign funds are flowing into the United Arab Emirates and Qatar as those markets prepare to be upgraded by global equity index compilers this year - but so far only a few top blue chips are benefiting much, a Reuters study of trading data shows.

At the end of May, MSCI will raise the UAE and Qatar to emerging market from frontier market status. S&P Dow Jones Indices will do the same in September.

By putting those countries on the radar screens of international fund managers, the upgrades are expected to bring billions of dollars of fresh money to the markets. The data shows the inflows of funds have already begun."

"Dubai real estate prices and rentals peaked last September and have drifted sideways for the past six months. A few distressed sellers are now dropping their prices and that should lead the market lower over the summer.

That’s the conclusion of the latest Dubai real estate report in our sister investment newsletter this month. Off-plan sales have recently flooded the market with new product much of it bought for speculation in anticipation of ever rising prices. But this is just not happening. There are still some sales close to current asking prices but prices and rentals have stopped going up."

"Ukraine’s credit rating was cut by Moody’s Investors Service, which said escalating political tensions and the withdrawal of Russian financial support are weakening the country’s fiscal strength.

Moody’s lowered the rating one level to Caa3, two steps above default, with a negative outlook. The cut takes into account an agreement with the International Monetary Fund to provide “near term liquidity relief,” according to a report published today.

The Russian takeover of Ukraine’s Black Sea Crimean peninsula has reignited Cold War tensions with the U.S. and Europe and rattled financial markets. Ukraine’s debt may rise to the equivalent of 60 percent of its economic output by the end of the year from 40.5 percent in 2013, Moody’s said. It forecast the economy may shrink as much as 10 percent in 2014."